Jim’s Mailbox

Posted at 1:24 PM (CST) by & filed under Jim's Mailbox.

Mr. Sinclair,

Could this be the EU Lehman Bros?

CIGA James

Dear James,

Yes.

Jim

Deutsche Bank Opaque Loans From Brazil to Italy Hide Risk
By Elisa Martinuzzi and Vernon Silver – Jul 10, 2013

Deutsche Bank AG (DBK), perennially among the top three in global credit markets, made billions of dollars of loans to banks worldwide since 2008 and accounted for them in a way that obscured their continuing risk to investors.

Germany’s largest bank managed to lend to firms from Brazil to Italy while making the transactions disappear from its balance sheet, even though it still is owed the money, according to four people with knowledge of the practice and internal documents provided to Bloomberg News.

Deals totaling 2.5 billion euros ($3.3 billion) involving Italy’s Banca Monte dei Paschi di Siena SpA and Banco do Brasil SA reveal a technique that obscured Deutsche Bank’s lending reach when it sent cash to the banks, the documents show. The company had talks about a similar loan to Dexia SA (DEXB) weeks before that firm was rescued, according to the documents, and it used the same accounting for other deals through 2011, two of the people with knowledge of the transactions said.

“We should be very concerned about the opacity and complexity of these transactions,” said Joshua Rosner, an analyst at research firm Graham Fisher & Co. in New York who warned in early 2007 that securities linked to subprime loans posed risks to the economy.

More…

Jim,

Mr. Ross, one of the founders and biggest names of the bond markets, bets that gold will be double the current price in one year’s time.

Regards,
CIGA Pedro

Stanley Ross Eluded Nazi Bombs to Transform World Bond Markets
By John Glover – Jun 25, 2013 5:01 PM MT

As 11-year-old Stanley Ross huddled in a shelter on a North London public housing estate in the summer of 1942, a German bomb landed just feet away. It was a dud.

“There was a stick of eight bombs and ours was the fifth, and it landed just there,” he said, pointing to the adjacent table during a June 6 interview at London’s Savoy Grill. “Had it gone off I wouldn’t be here now. I’d have been vaporized.”

The son of a London bus conductor, Ross later became the first non-German-born managing director of Deutsche Bank AG. (DBK) He was visiting the Savoy where he and other Eurobond bankers and traders used to mingle with the likes of then-Prime Minister Margaret Thatcher and John King, who prepared British Airways Plc for sale to the public.

Ross, who left school at 15, traded the Autostrade SpA Eurobond that in 1963 was the genesis of today’s $4 trillion-a-year market that’s at the center of global finance. That deal 50 years ago came about after bankers led by Siegmund Warburg created the debenture so its interest payments were untaxed, attracting the pools of American dollars accumulating in Europe.

More…

Jim,

Within all the hoopla over the 8.3% increase in New Home Sales, we find the following:

When combined, Net sales of homes was down -22,000
And the prior month’s revisions was also down -35,000

So much for a frothy housing market.

Don’t be fooled by MSM.  QE will continue in spades.

Existing Home Sales: 5,140,000 to 5,080,000  – 60,000
New Home Sales: 450,000 to 497,000 +38,000

Net Sales -22,000

Last month’s Revisions:

Existing Home Sales 5,180,000 to 5,140,000  – 18,000
New Home Sales 476,000 to 459,000 – 17,000
Net Sales Revisions -35,000

CIGA Wolfgang Rech

 

Jim Sinclair’s Commentary

An intelligent argument made by Gijsbert Groenewegen that sustains the negative impact that a higher dollar/lower yen has on the effort to restrain US interest rates.

A higher dollar is contra indicated at a time when the Fed wishes to hold rates in the lower recent ban of trading.

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The point I am trying to make in this paragraph is that when the yen keeps on weakening further, or the dollar keeps on strengthening, it will automatically trigger more dumping of US treasuries forcing US interest rates automatically higher! And especially because Japan is the second largest foreign holder of treasuries this relationship is so important. It is much more important than the Rupee/US dollar relationship. India had reported treasury holdings of only $58bn in February 2013 and is thus not of significant importance with respect to putting upward pressure on US interest rates. The more negative effect here is that the lower rupee triggers foreign investors to sell Indian bonds forcing higher Indian rates.

www.groenewegenreport.com